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AMD prepares for a major ramp up this year leading all the way through to 2008

AMD's position as a force to be reckoned is no longer under question. The company has invested significantly over the last several years and made very good bets on its strategy that are now bringing fruits to the effort that was put in.

We previously reported earlier in the year that AMD was putting in a rough sum of $500M USD to upgrade Fab 36 in Germany. The money was laid out to upgrade the facility to produce larger wafers with smaller lithography processes. Since then, Fab 36 has been operating at a good pace and is now producing a good amount of revenue.

Despite the initial investment, competition often sparks innovation, and innovation doesn't stand still. According to German reports (english), AMD is in the process of rounding up another $5.8B USD which is to be spent gradually up to 2008. The company is using the money to further invest into its Dresden location. If this plan goes through successfully, AMD would have made one of its largest ever expansions in its history -- or for that matter, any semiconductor company.

The money is initially slated for Fab 36 and Fab 30 in Dresden, but the German report indicates much of the earmarked money will also go towards a third AMD foundry in the Dresden area, with work beginning this summer.  Some of the funds will also be used for employee salaries at the new and upgraded facilities.

The year so far has been exciting, with many announcements from both sides of the camp. Thanks to first impressions of Intel's upcoming Conroe processor, many analysts are now looking at AMD with a great deal of anticipation to see what the company will come out with next, specifically the K8L architecture. AMD is currently on track in terms of timely product releases and expects to deliver quad-core desktop solutions in early 2007. The company recently broke its own 3GHz barrier with its Opteron family.

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made in china!
By Thinkpad2668CC1 on 4/5/06, Rating: 0
RE: made in china!
By Griswold on 4/6/2006 5:21:53 AM , Rating: 2
You wish. :P

RE: made in china!
By Thinkpad2668CC1 on 4/6/2006 8:13:35 PM , Rating: 2
i think that china is great country . we can make enough cpu for world!

RE: made in china!
By Jellodyne on 4/6/2006 11:55:52 AM , Rating: 4
AMD would only need to make a few CPUs in China before they'd need to compete with suspiciously similar Chinese "designed" products.

Buy good chineese Athron 64 an Optelon processor great time math calculations!

RE: made in china!
By Zelvek on 4/6/2006 9:05:23 PM , Rating: 2
I thought that L and R pernounciations were only reversed in Japaness

RE: made in china!
By ceefka on 4/10/2006 7:22:28 AM , Rating: 2
My understanding was that Chinese have problems with R pronouncing it as L and Japanese have that exactly the other way.

RE: made in china!
By JuniorMei on 4/10/2006 11:59:05 PM , Rating: 2
Japanese pronounce R as L. Chinese can pronounce R and L.

Third fab in Dresden?
By Scrogneugneu on 4/5/2006 8:07:45 PM , Rating: 1
So, what exactly happens if, someday, a natural disaster hits Dresden and destroys pretty much eveything in its path?

I'm all for new fabs and investments, but investing so much in the same place is not advisable...

RE: Third fab in Dresden?
By fw on 4/5/2006 8:35:10 PM , Rating: 3
What kind of natural disasters?? Hurricanes and tsunamis aren't issues due to location, you might get a single tornado every 3 years in all of Europe, and Germany rarely if ever has earthquakes. The only thing you might have is floods due to the river flowing thru Dresden, but that can easily be mitigated by the right building site.

Location is not an issue

RE: Third fab in Dresden?
By modestninja on 4/5/2006 10:53:43 PM , Rating: 2
What if they get firebombed again?

RE: Third fab in Dresden?
By Madellga on 4/6/06, Rating: -1
RE: Third fab in Dresden?
By josmala on 4/6/2006 2:47:03 AM , Rating: 3
If disaster is caused by human nature, its not called natural disaster.

RE: Third fab in Dresden?
By Griswold on 4/6/2006 5:25:06 AM , Rating: 3
Flooding is no real issue there either, as the Fabs are pretty far from the river, just like the airport - for a good reason.

I'm sure they carefully picked the location with floods in mind. They happen pretty much on an anual basis there.

RE: Third fab in Dresden?
By PrinceGaz on 4/6/2006 5:19:52 AM , Rating: 2
I was a bit concerned they were putting all their eggs in one basket (or all their fabs in one city) as well, as some industrial disaster/terrorism/whatever could destroy them all in one go.

But the facilities will be well covered by insurance so the main effect of catastrophic damage would be reduced production capacity until they can be rebuilt. And the insurance might even cover losses caused by the facility being unusable during rebuilding.

I'm not suggesting a company anywhere near the size of AMD would do it, but it's certainly not unknown for small less reputable businesses to destroy premises because of how much they'll get from the insurance claim.

By Doormat on 4/5/2006 8:23:35 PM , Rating: 2
How do you spend 5.8B USD gradually over 3 years? Thats about 5.3M USD per day (including weekends holidays, etc).

RE: gradually?
By cornfedone on 4/5/2006 8:29:16 PM , Rating: 1
Gradually = 3 years NOT 1 year

RE: gradually?
By Haggar on 4/5/2006 9:58:07 PM , Rating: 2
That $5.3m a day is over 3 years...NOT 1 year

$5.3m x 1095 days = $5.8b

RE: gradually?
By Doormat on 4/5/2006 10:13:45 PM , Rating: 2
That was a question about the amount of money. I guess I dont think 5.3M per day is gradual even if I have 5B to spend.

RE: gradually?
By PandaBear on 4/6/2006 3:04:20 AM , Rating: 2
Consider many equipment are over 20 million each (and you need a whole bunch), and the cleanroom cost over $1k/USD per sq ft, you can spend that kind of money very quickly.

Big business motives.
By OTEKKENDURE on 4/8/2006 7:34:25 AM , Rating: 2
It's risky to invest that much in Dresden. But if it pays off we'll be looking forward to some big-off cpu power in the near future capable of busting incoming 'meteors' - averting natural disasters. Ha Ha.

By hans007 on 4/8/2006 8:02:59 AM , Rating: 2
well the reason they built their plants in dresden is the state of saxony there paid for half of them with tax breaks and such , free land whatever, so that they would move there. until fab30 , amd's main fabs were in texas. at the time fab30 was being built, amd was practically bankrupt so they took the deal from germany. i mean german labor is EXPENSIVE even compared to in america. but to get the money to build the fab they went ahead with it.

amd has like no cash. they dont even have 5.8 billion to spend as it is, this is all contingent on them making a ton of money in the next 3 years or selling A LOT of bonds or the germans picking up the tab.

a lot of european nations do this, ireland does too for other factories etc.

that said, they package them in malaysia / philippines etc because labor there is cheap pure and simple.

also to wheover said that the athlon 754 didnt come out till september 2003 or whatever. the opteron was out over a year before that, so the athlon 64 architecture is about 4 years old now.

RE: Big business motives.
By PandaBear on 4/12/2006 12:18:41 PM , Rating: 2
The efficiency gain by having all their stuff (and staff) in one place is much more than the risk of natual disasters.

Think, which one is more likely to occur? A yeild drop that need quick reaction? or a meteor? When the company I used to work for build equipment for their FAB36, they have it designed so that one FAB's cleanroom can transfer their wafer stack (25 of them) in a sealed cassette to another FAB's cleanroom. You can't do that if 2 FAB are 12 timezone away without lots of contamination and time. Another benefit is to reuse resources like administratives, engineeers, HR, shipping, maintanence, and of course, expensive metrology equipments.

By fliguy84 on 4/5/2006 6:24:18 PM , Rating: 1
So they make the wafer in Germany, then what do they do in Malaysia? Just packaging?

RE: so...
By PandaBear on 4/6/2006 3:05:06 AM , Rating: 2
Yes, front end in high tech fab, backend in cheap places like Malay and China.

RE: so...
By Griswold on 4/6/2006 5:21:00 AM , Rating: 2
The wafers are actually made in france by another company iirc. The die is made in germany and the package is made in malaysia.

Thats globalization.

S754 5yrs old ?
By robg1701 on 4/5/2006 6:53:21 PM , Rating: 2
The S754 Athlon64 launched at the end of September 2003, so S754 is a long way from being 5 years old IMO. Development time really doesnt count i reckon ;)

RE: S754 5yrs old ?
By Cincybeck on 4/5/2006 7:28:10 PM , Rating: 1
I think they going by the date at which working samples were sent to anandtech.

By cornfedone on 4/5/2006 8:28:22 PM , Rating: 2
Not to worry about any disaster in Dresden. AMD has Charter Semiconductor coming online in June '06 and capacity available at IBM Fishkill and elsewhere.

Not in Malaysia
By jmunjr on 4/6/2006 3:36:36 AM , Rating: 2
Ha, we really don't want chips manufactured in Malaysia. There are still some things that require skill to manufacture..

You simply miss the point
By Dfere on 4/6/06, Rating: 0
RE: You simply miss the point
By masher2 on 4/6/2006 2:28:39 PM , Rating: 2
> " Rarely do medium and larger size companies, when they can, locate all items in one geographic region. It often called disaster management, recovery management or some similar name"

You miss the point yourself, however. When you locate dependent resources in multiple locations, you increase the effects of a disaster, not reduce them.

When you make wafers at location A, dies at B, and packaging at C, a disaster at ANY of those locations affects all the rest.

AMD isn't spreading out manufacturing to reduce the impact of a natural disaster. They do it for other reasons.

LOL you all....
By kattanna on 4/6/2006 12:06:19 PM , Rating: 2
IF something WERE to happen in dresden that would trully impact AMD's operations on such a scale as you all are worried about, you know like a meteor hitting the city or such ;>), i really think AMD not being able to make some chips for a while would be the least of the issues there...

2d source
By margon on 4/6/2006 12:42:45 PM , Rating: 2
I'm not sure customers would be that concerned about buying from AMD for the reasons stated above. If something happpened to Fab36, Intel would prabably be more than capable of filling in the added demand. AMD was licensed to produce x86 chips in the first place because customers wanted a second source from Intel for similar reasons.

Va Va Boom
By smilingcrow on 4/14/2006 12:25:36 PM , Rating: 2
Let’s hope Dresden isn’t too close to the French border; I don’t think burning automobiles moving at high velocity mix well with clean rooms.

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